THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Thursday, June 6, 1996 TAG: 9606060393
SECTION: FRONT PAGE: A2 EDITION: FINAL
SOURCE: ASSOCIATED PRESS
DATELINE: WASHINGTON LENGTH: 66 lines
Hours after President Clinton picked Adm. Jay L. Johnson to lead the Navy, a senator raised concerns about Johnson's paid position on an insurance company that serves the military.
Sen. Strom Thurmond, chairman of the Senate Armed Services Committee, said he is concerned about a Pentagon policy that lets active-duty officers serve in paid corporate positions. On hearing of Thurmond's concern, Johnson said he would resign his post as board member of insurance giant USAA.
``Although I was informed last evening by Defense Department officials that President Clinton intends to nominate Adm. Johnson to the position of chief of naval operations, I am going to withhold my opinion of the nomination until I have had the opportunity to review the documentation,'' Thurmond said.
``I have serious concerns about the DOD policy that allowed Adm. Johnson and other flag officers to be paid members of the board of the United Services Automobile Association,'' the South Carolina Republican added. However, he said he had no indication that Johnson had broken any rule.
The armed services panel will make its recommendation on Johnson's nomination to the full Senate after holding public hearings.
The development did not appear to affect Johnson's standing at the White House. Aides said the Navy has known about his position for years and had cleared him of any conflicts. ``We were not blindsided by this,'' said one White House aide.
And an Armed Services Committee staffer, who spoke on condition of anonymity, said that while members were concerned, Johnson's nomination did not appear to be in jeopardy.
USAA, based in San Antonio, offers homeowners, auto, life and casualty insurance and a range of other financial services including credit cards, mutual funds and banking. With $6.6 billion in revenue last year, the company has more than 2.9 million customers, most of them members of the U.S. military and their families. That total includes more than 95 percent of all active-duty military officers.
Thurmond, a World War II veteran, and several committee staffers are USAA policyholders.
Johnson is paid $33,000 per year for serving on the USAA board, a post that involves attendance at one annual meeting and five board meetings per year. That salary equals more than a quarter of his annual pay as a four-star admiral - $118,145. Johnson has served on the board since 1991 and has included the compensation on required financial disclosure reports.
``This is legal,'' said Rear Adm. Kendall Pease, the Navy's chief spokesman. ``The Navy wrote a letter to Sen. Thurmond prior to his nomination as vice chief (earlier this year). . . . The military ethics people have all looked at it. It's within policy.''
Johnson's service on the board is governed by a 1993 Pentagon directive that forbids outside income in positions that might be linked to military policy decisions, Pease said.
``There can't be a conflict of interest,'' Pease said.
As a four-star officer, Johnson has been nominated and confirmed several times for key promotions, most recently earlier this year when he was elevated to vice chief of naval operations, the Navy's No. 2 post. In each case, his service on USAA's board was reported as part of his financial disclosure.
``I was not aware that active-duty officers of the United States armed forces could receive income from such activity,'' Thurmond said. ILLUSTRATION: Photo
Thurmond
KEYWORDS: U.S. NAVY CHIEF OF NAVAL OPERATIONS
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